Los Angeles officials have moved to kill a $700 million downtown hotel and condo project because the developer — and development — is linked to federal racketeering charges against City Council member Jose Huizar.
The once powerful Council member is accused of accepting $1.5 million from developers to help steer their projects to approval.
Planning Director Vince Bertoni wrote in a June 15 letter to the U.S. subsidiary of China-based Shenzhen Hazens Real Estate Group, that the city was “commencing revocation proceedings.” Shenzhen Hazens received approval from the city in 2017 to build a 435-unit, 49-story residential tower and a 29-story, 300-key W Hotel, along with 80,000 square feet of retail space.
The development would replace the Luxe City Center Hotel at 1020 South Figueroa Street. Work never began on the site.
The call to revoke approvals for the project came at the urging of City Attorney Mike Feuer.
In the letter, Bertoni said Feuer informed him of “details of courts filings in which the U.S. Attorney’s Office disclosed egregious misconduct involving bribery associated with the Luxe Hotel project.”
A copy of the letter was provided to The Real Deal Thursday.
Betroni added in the letter that City Planning “is committed to transparency and accountability in the planning process, and core to our mission is ensuring the public’s trust in planning for Los Angeles.”
The letter was written a week before federal agents arrested Huizar, but after former real estate broker George Chiang’s plea deal in May in which he admitted to one count of federal racketeering for his role in the bribes.
According to federal prosecutors, Shenzhen Hazens funneled $66,000 in perks through Chiang, including fees for “consulting,” flights on private jets, luxury hotel stays, and prostitutes to Huizar and alleged members of the criminal enterprise.
In exchange, prosecutors contend, Huizar used his perch as downtown Council member and chairman of the Planning Land Use and Management Committee to ensure Shenzhen Hazens’ project won approval.
Late last month Council members Paul Krekorian and David Ryu said they wanted a review of development projects that were mentioned in connection with the Huizar case to see whether city permits should be suspended or revoked, according to the Los Angeles Times.
The call to revoke the Shenzhen Hazens project is one of the most direct moves Mayor Eric Garcetti’s administration has made during the long probe into Huizar’s alleged misdeeds, but critics say it is a relatively safe one.
Shenzhen Hazens still hasn’t started construction on the project, unlike other developers implicated in the Huizar scandal, including Carmel Partners and Shenzhen New World Group.
Shenzhen Hazens’ only other L.A. County property is a Sheraton hotel near Los Angeles International Airport.
“My sense is that the letter is an attempt to make it look like City Hall is concerned about corruption, which it isn’t,” said Casey Maddren, president of United Neighborhoods for Los Angeles, a frequent city hall critic.
A spokesperson for the City Attorney said he is “currently looking at other projects” tied to the corruption scandal. Feuer in March announced his run for mayor in 2022.
Shenzhen Hazens bought the Luxe City Center Hotel for $105 million in 2014, and began plans for an expansion of the site that fit into other grand plans for downtown skyscrapers, with many such projects orchestrated by China-based developers.
But like other projects including Oceanwide Plaza, the redevelopment struggled to get going.
Shenzhen Hazens repeatedly asked the city for extensions on its building permit. The last approved extension was filed in December, according to city records. A Planning Department spokesperson said there were no current building permits on file for the project.
That makes the city’s job in revoking the project easier, said lawyers who spoke on the condition of anonymity because they do business with city hall.
Technically, the lawyers noted, the city needs to just revoke Shenzhen Hazens’ permit for serving alcohol and hosting live entertainment and public dancing. Meanwhile, the Luxe Hotel has been closed since March due the coronavirus pandemic, according to the hotel’s website.
Numerous messages left Wednesday and Thursday with Shenzhen Hazens staffers were not returned.